Archive for the 'MoneyMinding Musings' Category
Thursday, August 13th, 2009
I heard a very interesting story of a young person who deposited their first pay check and went home thinking there was an error because there was more money than she was expecting. When she first looked at the information, she interpreted the section on deductions to be the money that was to be deposited rather than the amount that was subtracted from the full or gross amount of the pay.
Of course, she was pleasantly surprised to find that the larger amount was hers to keep. However, this story is so significant to me because I frequently hear of companies wanting to have financial professionals come to help their young employees make investment decisions. The reality is that what they need is the simple, day-to-day education on simple basics – like how to interpret a pay check, how to set up bank accounts, how to spend money and how to track money coming in and money going out (income and expenses).
When you assume that a young person needs help picking mutual funds for their retirement, you also miss the key aspect of their more immediate needs – like housing, food, transportation and understanding of basic finances.
Reading a pay check is one of those things that is assumed, and one that can have a significant impact on current and long-term finances. I know another story where the medical deduction was missed from a pay check and rather than it being listed than left blank it simply did not appear anywhere on the pay stub. You can imagine the implications of expecting that you have your medical insurance covered because it has been deducted from your pay check in the past only to find out that it hadn’t been paid.
The employer told the employee that it was his responsibility to know that the medical insurance premium was not being deducted. Fortunately for this employee, his wife had a solid financial background and was able to find the right person in the organization to help straighten the situation around with only minor complications. However, if you don’t know what you don’t know, you won’t know until it’s too late that there has been an error, or that you’ve missed an opportunity, were misunderstood or are completely out of luck!
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Thursday, November 13th, 2008
by Catherine Novak, based on the MoneyMinding 12 Simple Steps by Tracy Piercy, CFP
A career magician named Tony Eng lived in my town of Victoria BC all his life, until he passed away earlier this year. When he died, it was major local news, because so many local families had been entertained and bedazzled by magic tricks, especially his sleight of hand. Tony could perform standing right in front of you and play tricks with handkerchiefs and cards with such dexterity that even though you were right there, you had no idea how he “put one over” on you. And you loved that he tricked you, because he did it with such warmth and love of his craft
Of course, not all trickery is so warm and fuzzy, especially when it involves your money. Now, this isn’t an article about con artists and other charlatans who are deliberately out to separate you from your money against your will. Plenty of articles have been written about those criminals; many consumer organizations, securities commissions and other regulatory organizations have information on how to protect yourself against theft, fraud and shady deals.
The fact is, we can be tricked by people and circumstances that bear no ill will at all towards us. We can be tricked by the nightly news, by a hot tip from our brother-in-law, or even by our own financial statements… if we’re not maintaining the right focus. Trickery happens when your attention is shifted away from the real focus and onto something else that’s eye-catching and flashy. You may think you have your eye on what’s important – in fact, you’re just looking at the carefully-shuffled deck, or the shiny object. And when your attention is diverted in this fashion, you miss what’s important. You’re duped, and the joke is on you.
The biggest “tricks” when it comes to money are the ones we play on ourselves, when we let ourselves get pulled off-track by undue focus on individual factors that don’t take into account our personal “big picture”. Two of these factors are rates of return and advisor fees. These can form a piece of the picture when we are making financial decisions, but to focus only on these “numbers” is to ignore vital information like your investment philosophy, the quality of your investment and when you need to turn that money into income.
What does it matter if your advisor fees are 2.5 percent when they pay for expertise that would have cost you more time and money to learn on your own? Why should you lose sleep at night in an investment more volatile than you can stomach just to chase a higher rate of return? Perhaps you can reach your goal with a lower rate of return delivered more consistently.
When it comes to money, your focus should always be on your personal, specific goals. Do you know how much money you will need to live life the way you want to? Do you have a plan to make that money come in each month, now or in the future? If so, make that plan come to life. Getting distracted by scary news about the financial markets won’t help. Spending too much time fussing over management expense ratios is counterproductive. Exhausting yourself searching through newspapers and driving across town to save two bucks with a coupon probably won’t help either.
Now is the time to sit down with a trusted advisor, with your spouse, even just with your list of priorities and ask “What am I doing to secure my income on a monthly basis?” You may decide to reshuffle some priorities. You may find that your portfolio needs rebalancing. You might not take your brother-in-law up on that tip -but then again, you might if it contributes toward your monthly income goals! At least this way, your eyes are open and you are looking at something solid and unchanging.
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Monday, October 20th, 2008
Victoria BC - Certified Financial Planner and founder of MoneyMinding Inc., Tracy Piercy, volleyed criticism at financial commentators who say only “don’t panic” in the current financial crisis. This financial educator is offering alternative advice, recommending a much more active role for investors and their advisors.
“People are looking for practical, timely answers that will put them back in the driver’s seat, even if the road is rocky in today’s markets,” says Piercy. “But the content of most personal finance articles offers nothing concrete. They might as well tell the investors reading it that they just need to give all their trust to the professionals who have crystal balls and will make sure they live happily ever after.”
Piercy continues, “If you rely on someone else’s professional help to guide your financial affairs, you still need to have an active role in the outcome. In medicine, you see a doctor, but you have to take the medicine and live a healthy lifestyle; same thing with money. The problem with the cliché prescriptions being offered today is that they don’t provide anything original, timely, useful or practical. Real people need personal answers that will actually help. Even the language is generic and not well-defined. How about explaining what risk is, for example, rather than telling people to ‘avoid excessive risk’? Rather than saying ‘don’t panic’ and ‘stay the course,’ proactive advisors give investors a strategy on when and how to take action to stay in control.”
Piercy recommends that financial professionals make client lifestyle goals and monthly income the focus of any conversation involving whether or not to stay invested.
Piercy’s company, MoneyMinding, works with financial professionals and their clients to help demystify personal finance concepts and the financial markets, so individuals can gain control of their money “without sacrifice or cutting back”. It accomplishes this with two flagship products, the MoneyMinding Makeover Course and the MoneyMinding Network, as well as through books, seminars, special reports and CDs. Visitors to the moneyminding.com website can download the “Mending Your Money Mistakes” report free of charge when they subscribe to the newsletter, The MoneyMinding Messenger.
For more information:
Catherine Novak
Marketing and PR Coordinator
250-592-0457 or toll free 877-764-6444
catherine@moneyminding.com
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Tuesday, July 8th, 2008
The Wall Street Journal Online’s blog on wealth quoted an interesting, if small, study on splurge spending which obviously touched a chord in its readership.
Usually, articles in WSJ Online’s wealth blog generate around 15 comments - maybe over a hundred if you are combining the topics of wealth and politics, which tends to bring out the armchair pundits. But the post “Splurging is Good for Your Health” generated a whopping 477 comments at last count, with most everyone weighing with their own judgements on whether “overpriced indulgences” lead to happiness and less regret.
The “spenders” and the “savers” seem to show up in equal numbers, and with equally valid justifications for their points of view. A few people dissed the study itself, published in the Harvard Business Review, for being too small and from too narrow a demographic.
The wisest comment - at least in the first 100, which was about as far as I got - was this one, from one Mike in the U.K.:
“It’s easy to spend too much and have no future - It’s just as easy to spend too little and have no past - The difficult bit is to get it just right.”
That’s why it’s so important to keep your goals and your values foremost, and know what they are before you start building your “ideal budget”.
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Friday, June 20th, 2008
I have had a conversation with a couple of our advisors and really come up with more questions than answers on why someone would want to close a credit card – mostly because we can only think of a very limited number of reasons why someone would ever want to close a credit card account. Those being:
- default – in which case the institution would do it for you
- it interferes with you accessing a lower rate or better credit
- death or divorce
One of the big mistakes people make is telling themselves they can’t be trusted with credit so they work hard to pay it off, then close it. This is only reinforcing a poverty mentality and an ‘I can’t trust myself’ sort of attitude which will just create more and more problems.
Closing an account before it’s paid off seems a bit odd. If your account isn’t in default, and your intention is to pay the balance, then you are best to just keep the account open and keep paying for it. It will still appear on your credit bureau, so I’m not sure what the benefit would be to ask for it to be closed while you continue to pay off a balance
Regarding how to check on your accounts, the answer is always the same – to take control of your situation and to check your personal credit bureau. If you want something changed, then it is your responsibility to check it and that is done through the credit bureaus directly. And, if you really do want to close an account, then it has to be done in writing – and each institution will have a different procedure – check with them individually, and follow up.
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Friday, June 6th, 2008
A journalist sent out a query yesterday asking, in essence, if it were advisable for financial professionals to be involved in community activities. The subtext of the question was whether the possibility of financial gain would “taint” the charitable activities somehow. That thought cried out for an answer from MoneyMinding, because not only is every staff member involved in community activities - we also started a charity!
If you’ve been following MoneyMinding’s growth over the last few years, you should know about the MoneyMinding Foundation, a registered charity which supports financial literacy and empowerment programs both locally and around the world.
The MoneyMinding Foundation helps us to open the doors of financial literacy to people who otherwise could not afford to acquire the information themselves, or have access to the services and information they need to succeed financially. In our training system the giving component of financial planning is not something that is left to the end and discussed as part of an estate plan. It is an integral component of the wealth building process. Having a holistic and inclusive business model that addresses the needs of an entire community is key to our success. A healthy, vibrant organization needs to give back to the community in some form or other – either financially, or through volunteering.
On a personal level, I have also been an active volunteer and contributor to the church and local charitable organizations, and have several sponsored children in developing countries – all of which have been good for me, good for the recipients and good for business.
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Tuesday, May 13th, 2008
We love finding ways to help people make money, whether they are 7 or 70. Here are a few innovative ways that grandparents can encourage their grandkids to make money this summer – without chores or gardening!
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Get a game system that works for all ages – a Nintendo Wii comes to mind – and have your grandchildren set it up for you and give you lessons in how to play.
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Invite over friends and neighbours for a summer barbecue – your grandchildren would learn a lot by being the caterers: planning a simple menu, making a budget, shopping, preparing the food, serving the guests and cleaning up.
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Enlist their help as you write – or record – your memoirs. Get a digital recorder and have the kids put the files onto a computer. Or if they can type, they can transcribe your written pages. If they are crafty, you could sit down together and put your pictures into a beautiful scrapbook.
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Thursday, May 8th, 2008
Many people who spend time and effort teaching others about money want to cure “bad spending habits”. That’s an intriguing point, because spending is not “good” or “bad” necessarily… even compulsive gamblers, at least in Canada where the government regulates gambling, have the results of their spending benefit many charities. It’s all in the values we attach to our spending, and when you come right down to it, how intentionally you spend it. So for argument’s sake, let’s say you open your closet door one day to find some shoes, and you realize you have so many that there are some you have never worn – maybe you don’t even remember buying them. That lack of awareness while you were accumulating all those shoes might be a sign of a spending habit you want to change. In order to change the habit, it’s not enough to stop what you have been doing – you need to exchange that habit for something with some more value to you. My tip: Why not take the shoes you haven’t been wearing, and donate them to a charity that outfits low-income women re-entering the workforce? Your habit now has a great benefit to others, and a tax receipt for you. If you want, keep that charity in new shoes for as long as you like.
The bottom line is to learn to spend in line with your core values by starting off using cash (not credit or debit) as your payment vehicle, and keep your overall big picture – your goals – in mind. The MoneyMinding Makeover teaches a whole module on spending.
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